The U.S. Postal Service has proposed an average rate increase of 5.4%, which could be implemented across all classes of mail in early 2006. That proposal is pending before the independent Postal Rate Commission, which, at press time, is expected to rule this fall. All things considered, the rate increase is reasonable since it will help maintain affordable universal physical mail service and encourage the USPS to embrace technology to improve mailstream efficiencies for businesses and consumers. The potential downside is higher costs for business mailers large and small. For example, a mailer that currently spends $5,000 per month on postage, or $60,000 per year, will pay nearly $3,240 more annually with the new rates but only if operations continue in a "business as usual" mode.
When considering the challenges the rate change presents, I am reminded of the quote from philosopher Friedrich Nietzsche, who said, "That which does not kill you makes you stronger." Not only will the rate increase not kill us, but with a strategic approach, Postal Reform will albeit circuitously make the entire business mailers' industry more robust. While the rates will rise, the reward will be an industry that operates more efficiently and profitably due to a greater motivation to adopt "best practices."
Companies must resist the temptation to hack away at expenses recklessly by transitioning to substandard equipment and services. Cost-cutting alone is not a growth strategy, and can often have quite the opposite effect on the health of a business. Adopting new practices to more efficiently and effectively manage the mailstream, on the other hand, is a strategy for greater productivity and profitability. The following are a few best practice guidelines to help businesses of every size reap the benefits of available resources.
Address Hygiene: For an envelope bearing the words "undeliverable as addressed" passing through a mail center, industry estimates tie profit losses to each envelope ranging from $3 to $11. This should help reinforce the critical role address hygiene plays in profitability. It is not uncommon for a large corporation to waste millions annually because of returned mail as a direct result of an outdated customer database. With approximately 40 million USPS customers filing permanent Change of Address cards each year, address management software is one of the most critical pieces of the mailstream investment. Without proper updating, money is lost through the initial mailing and again through mailpiece recreation and re-processing. Productivity gets squandered as well. Also, using outside vendors to manage lists can be time-consuming and expensive. Worse, in some cases, vendors do not implement practices that comply with USPS Move Update requirements, which can result in wrongfully gained discounts and high costs from returned mail.
Work with a postal consultant to obtain software that will eliminate duplicate or undeliverable addresses. The best bet is to use a system that corrects addresses using a CASS-certified CD-ROM that stores every deliverable address in the
USPS Special Services: Examine the USPS Web site and take advantage of new special services that can help a company's bottom line. For instance, the USPS began offering an electronic version of the return receipt for Certified Mail in 2004. After the proposed rate change, the difference in cost between an electronic return receipt and a paper receipt will be a sizable 50. per mailpiece. While businesses of all sizes can benefit from the savings, large businesses or government agencies that process high volumes of return receipts for Certified Mail can save staggering amounts of money using the electronic counterpart. Installing a mailing system that includes software, which allows the ordering and retrieval of electronic return receipts, automates this process and will increase productivity in addition to saving dollars.
Fold/Insert: Replacing manual folding and inserting with an automated process is another area where businesses can realize significant productivity gains and cost savings. Tabletop folders and inserters can be up to 20 times faster than manual processing.
Carrier Selection: Choose carriers carefully. Companies commonly overpay for services that are unnecessary simply because they do not know all their options. The savings can be several dollars on a single parcel. Talk to a postal consultant about implementing software that will allow the ability to "browse" different services and associated costs based on the weight and destination of the mailing materials as well as the required delivery timeframe.
Postage Discount Programs: Even small-volume mailers can take advantage of the postage cost savings offered by the USPS for participating in Workshare Discount programs. The advantages of these USPS-approved discount programs continue to help companies strengthen their bottom line. In 2004, Triangle Management Services in its World Mail Review Series estimated the
By employing an outsourced presort capability to do the presort work ordinarily conducted by the USPS, companies can meter their First-Class mail for a discount, have it picked up for no charge and delivered to a presort facility where the mail will be processed, barcoded and ultimately delivered to the USPS fully sorted. The effect on the bottomline: nearly five percent in postage savings.
With the products and services available to upgrade mailstream management, there is no need to fear the impending USPS rate change. I'll share a Chinese proverb that suits the rate change situation well: "The gem cannot be polished without friction, nor man perfected without trials." The rate change challenge positions business mailer decision-makers to work smarter and "polish" their mailstream management initiatives. Companies must adopt the necessary best practices to off-set postage increases and embrace a more sophisticated and cohesive mailstream strategy to drive growth and help businesses remain competitive.
Kevin S. Weiss is President, Mailstream/The Americas, for the Global Mailstream Solutions division of Pitney Bowes Inc. He can be reached at kevin.weiss@pb.com.
